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Friday, September 10, 2010

Lessons Learned

I recently saw Nick Murray speak. He is a well know advisor to financial professionals. He pointed out that we are approaching the 3-year anniversary of the all time high for the Dow Jones Industrial average (14,164 on October 9, 2007). We all know what has happened since then. Mr. Murray is quite good at keeping things simple and providing a clear perspective on financial markets.

Here are his five lessons learned from the past three years:

You can't call the economy in the short or intermediate term and neither can anyone else.

Neither can you or anyone else call the markets.

The more dramatic the next series of economic/market events will be, the less likely you can predict them.

a) There is no statistical evidence for the persistence of investment performance; "future relative performance with respect to past relative performance is random."b) At critical turning points in an investor's life, relative performance will not matter.